Blog Post

As part of the Affordable Care Act (ACA), manufacturers of devices, biologicals, medical supplies, and drugs that are covered by Medicare, Medicaid, and/or CHIPS are required to report to CMS payments or transfers of value for items, such as lunches, travel, gifts, etc. given to physicians when the value is $100 or more in a calendar year. The first data collection period begins August 1, 2013 and will be reported next year to CMS, which will in turn publish it for the public to review. The first reporting period will only be for August through December of this year. Beginning in 2014, the reporting period will be for the entire year. Although the mandate for reporting this information has been placed upon the manufactures, clinics may want to monitor what is allocated to their physicians to ensure manufacturers are reporting correctly.

The reason this may be of interest to physicians is because it will be made public. Once CMS publishes it, patients, whistleblowers, media outlets, and others will be able to access it. If physicians wish to continue to receive lunches, travel, honoraria, or other benefits from device and drug companies, they should monitor what the manufacturers will report concerning the value of the items or services received. Given a scenario where a device manufacturer has a problem with an item it manufactures, the negative publicity from it might spill over to a physician who has received benefits from the company. By searching the CMS database, media outlets might identify and publicize the names of physicians receiving benefits from the company that manufactured the defective device. This could present a sticky public relations situation for a physician receiving significant payments from that manufacturer.

Clinics and physicians may want to evaluate current policies as they relate to items provided by companies covered under the Sunshine Law. Although it will not be necessary to curtail benefits such as paid lunches, some clinics may choose to do so rather than increase the administrative burden required to monitor the activity.

It appears that the intent of this provision of the ACA is to highlight compensation in any form received from device manufacturers and drug companies by physicians in an attempt to limit the impact of such compensation on what the physician recommends for the treatment of the patient. With the availability of this information, correlations between a physician’s recommendations and compensation received might be developed. From the correlations, inferences could be made concerning the physician’s choice of products and factors influencing the physician’s decision.

If a physician receives something of value from a manufacturer but does not use or promote anything from that manufacturer that CMS considers a “covered item”, the manufacturer may still be required to report the valued amount to CMS. If the manufacturer has any “covered item” that it produces, it has the responsibility of reporting all payments and transfers of value to CMS for all physicians where the value of payments or services is $100 or more in a year. For example, if a DME representative takes a physician to dinner but the physician utilizes nothing that the DME company has that is covered by Medicare, it would seem reasonable that nothing would have to be reported. However, that may not be the case. If the DME company produces a brace that is utilized by physicians in another specialty, the company would be required to report the value of the meal to CMS. In essence, if a manufacturer has even one item that is covered by Medicare, Medicaid, and/or CHIPS, “perks” for all physicians must be reported.

Reporting is on an individual physician basis and not by group. Therefore, reported items must be broken down in such a way that the value can be allocated at an individual level. For example, a drug representative may bring lunch to an office for five staff personnel and a single physician. If the meal costs $120, the amount allocated to the physician for that meal would be $20 (i.e. $120 divided by 6). If a meal is provided for staff only, the value of the meal is not reportable to CMS for any physician in the clinic.

Basically, anything that is provided by a manufacturer that can be associated with a specific physician will probably be reported. This would include honoraria, travel, meals, meeting fees, tickets to ballgames, gifts, etc. As could be expected, there are exceptions. For example, a manufacturer contributing money to a society sponsored conference that did not provide payment for any specific physician would not be required to report this for any physician. Lunches provided for all physicians attending a seminar would likely not be reportable. However, if a manufacturer took the physician out for dinner at a conference, that would be reportable.

In addition to manufacturers, Group Purchasing Organizations, GPO’s, also have reporting requirements. However, these are limited to ownership relationships. The GPO is required to report any ownership interest by a physician or a member of the physician’s family and distributions they receive from the GPO. Discounts received through a GPO are not reportable.

Manufacturers are required to provide their reports to CMS by March 31st. CMS will publish this information by September 30th. There will be a 45 day period in which a physician may contest the amount reported by the manufacturer allowing for corrections to be made. Physicians who have signed up on the CMS website associated with Open Payments will be notified that a report has been made. However, the physician must initiate the process by enrolling. As it currently stands, the physician is responsible for enrollment and should not delegate it to a staff member.

Clinics should develop internal controls to monitor reportable items. For in-office activities such as lunches, the clinic should identify the physicians that eat and identify how the organization providing the meal will be allocating the value to the physicians. Also, for physicians that attend out of town meetings, a mechanism for capturing any items provided by manufacturer representatives should be developed.

It would be helpful to develop relationships with the reporting organizations whereby the organization would provide a physician access to the information they will be reporting before sending it to CMS. This would allow corrections before CMS has access to the information. Although it may be corrected once it is sent to CMS, it is unclear how soon corrections could or would be made.